RxSight, Inc.

launched to almost 11,000. Since the premium channel was created in 2005, enabling doctors to collect an additional fee above and beyond standard reimbursement for advanced technology intraocular lenses, or ATIOLs, doctors and patients have been seeking a premium solution that consistently delivers excellent quality of vision without glasses. The LAL uniquely meets this challenge by letting doctors optimize a patient's vision after surgery to achieve excellent vision over a range of distances at rates that are nearly double that of competitive products, but without reducing quality of vision or increasing unwanted effects such as glare or halos. In the third quarter, we also rolled out an important update to our technology called ActiveShield. which protects the LAL from ambient UV light, providing additional scheduling flexibility for patients and doctors. We did see procedures grow throughout the quarter, and particularly in September, as our active shield rollout was substantially completed. While we are early in the fourth quarter, we have continued to see procedure momentum accelerate, and now expect revenue for the full year to be between $21 million to $21.4 million. The growing excitement around our excite is also evident in our ability to build out our U.S. commercial team efficiently and with very high quality. We have increased the LDD sales force to 14 above our previously stated goal of 12 by year end. We now expect our LDD sales force to be at 18 by the end of 2021. While this team is focused on developing new customers, we have also created a new LAL team sales team that is focused on rapid and expanded LAL utilization at RX site practices. This group currently includes five members and is expected to expand to 18 in the first half of 2022, which will bring our direct field sales team to 36 members by that time. With that, I'd like to turn it over to Shelly for more details on the third quarter financial results.

Thank you, Ron. Good afternoon, everyone. As Ron noted, total revenue in the third quarter was $5.8 million, an increase of 18% sequentially compared to the quarter ended June 30th, 2021, and 39% increase compared to the third quarter of 2020. Looking at revenue by product, we sold 31 LDD systems in the third quarter of 2021, generating $3.7 million in revenue compared to 25 LDDs driving $3 million of LDD revenue in the second quarter of 2021 and 19 in the third quarter of 2020 for $2.7 million in sales in the prior year period. As expected in our early stage of commercialization, LDDs continue to dominate the sales mix, representing 63% of our revenue in the third quarter and 61% in the second quarter of this year. We sold 1,977 LALs in the third quarter of 2021, generating revenue of $1.9 million compared to 1,825 LALs driving $1.8 million of LAL sales in the second quarter of 2021. and 1,513 LALs for $1.4 million of LAL revenue in the third quarter of 2020. Third quarter gross profit was $1.3 million or 23.2% of revenue compared to a gross loss of $800,000 in the second quarter ending June 30th, 2021 and a $720,000 gross profit in the third quarter of 2022 or 17.3% of revenue. The sequential increase in gross profit was primarily due to a large reserve in the second quarter of 2021 for our previous version of the LAL due to Active Shield LAL introduction. The increase in gross margin from the third quarter of 2020 is due to higher sales volume. Selling, general, and administrative expenses for the three months ended September 30th, 2021 were $9.1 million compared to $6.5 million for the three months ended June 30th, 2021 and $3.8 million in the same period of the prior year. The sequential increase in SG&A expenses in the third quarter of 2021 compared to the second quarter was primarily due to increased headcount in sales and marketing, increased costs to operate as a public company, and an increase in stock-based compensation. Research and development expenses for the three months ended September 30, 2021, were $5.4 million, compared to $6.6 million for the three months ended June 30, 2021, and $5.8 million in the same period of the prior year. The decrease in sales in research and development expenses sequentially and as compared to the prior period resulted from lower consumable materials for testing and prototype expense and lower clinical study expense. Our R&D costs can vary quarter to quarter depending on stage of development of products and timing of clinical studies. Our net loss in the third quarter was $12.7 million, or 68 cents per share, basic and diluted, attributable to common stock using a weighted average share count of 18.7 million shares. While we had a total of 27.4 million common shares outstanding at September 30th, EPS is calculated on a weighted average common shares outstanding during the quarter, with few common shares outstanding prior to our IPO on July 31st of this year. Prior to our IPO, most of our shareholders own preferred shares, which were converted to common shares immediately prior to the IPO. I would also like to highlight the non-GAAP disclosures in the press release for the non-cash stock-based compensation expense and the change in the fair value of warrants, as it provides investors with useful comparative information. Stock-based compensation in the third quarter of this year was $2 million, and the change in fair value of warrants resulted in a gain of $1.5 million in the quarter, resulting in a non-GAAP basic and diluted loss of $0.65 per share. Moving to the balance sheet, we ended the third quarter with $168.3 million in cash, cash equivalents, and short-term investments Long-term debt was $39.6 million. With the increase in momentum at the end of the third quarter and the beginning of this quarter, we expect revenue for the full year to be between $21 million to $21.4 million, an increase of 43% to 46% over the full year of 2020. Gross margin is expected to be between 18 and 19% with a net loss between $49 million to $50 million for the full year. Since we are at year end, this translates to revenue of $7.1 to $7.4 million in the fourth quarter, gross margin between 31 to 33%, and a net loss of $16 to $17 million for the fourth quarter. Now I will turn the call back to Ron for closing remarks.

Thank you, Shelley. To conclude our prepared remarks, our message to surgeons and patients is clear. The LAL system provides optimal visual outcomes for patients after cataract surgery. We are actively sharing the clinical data and best practices that define this value, including at the American Academy of Ophthalmology meeting in New Orleans, scheduled for November 12th through the 15th. With our growing number of implanting surgeons and installed base of LDDs, our expanding commercial capabilities, and the potential for additional product enhancements, we believe we are well positioned to execute on our opportunity to meet and exceed the progressively higher expectation of premium cataract patients and doctors. And now, operator, please open the call for questions.